Futures tumble on Fannie
Stocks set for weak open as mortgage finance giant Fannie Mae reports a wider-than-expected loss; record-high oil prices also weigh on Wall Street.
NEW YORK (CNNMoney.com) -- Stock futures wavered early Tuesday as recent optimism about the economy was offset by weak earnings from Fannie Mae and record-high crude prices.
With about an hour and a half before the opening bell, S&P futures were down, and pointing to a much lower start for Wall Street.
Stocks tumbled Monday as investors worried about the collapse of several deals and surging crude prices.
High oil prices could knock sentiment again Tuesday. Oil futures hit a new trading high of $120.93 a barrel in electronic trading, then retreated to $119.81, off 16 cents from the record closing high reached Monday.
The recent surge in crude prices come amid growing hopes that the downturn in the U.S. may not be as deep as originally feared.
Fannie Mae (FNM, Fortune 500) announced early Tuesday that it posted a wide loss in the first quarter. The mortgage finance giant announced plans to slash its dividend and raise additional capital.
Shares were down 7% in pre-market trading after it reported a $2.2 billion loss, or $2.57 a share. Analysts surveyed by earnings tracker Thomson First Call had been forecasting a much narrower loss of 81 cents.
No major economic readings are due Tuesday, but Disney and Cisco Systems post results after the market close.
Investors will be watching for the latest in the fallout of the failure of Yahoo (YHOO, Fortune 500) and Microsoft (MSFT, Fortune 500) to reach a deal. Yahoo CEO Jerry Yang is still open to a Microsoft takeover, as long as the price is right, according to published reports.
Yahoo shares fell as much as 20% Monday after Microsoft withdrew its bid, although they rebounded 5% in early Frankfurt trading.
In major corporate news, Bank of America (BAC, Fortune 500) is committed to its takeover of Countrywide Financial (CFC, Fortune 500), according to a report in the Wall Street Journal. Doubts about the deal grew Monday after an analyst said the bank should ditch the merger.
Swiss banking giant UBS (UBS) said it plans to cut 5,500 jobs after posting an expected $11 billion quarterly loss.
Merck (MRK, Fortune 500) said Monday that it plans to cut 1,200 sales positions. The announcement, which was made after the market close, helped push shares of the Dow component higher in after-hours trading.
In global trade, Asian markets drifted as investors eyed the decline on Wall Street. Markets in Japan were closed. European stocks fell in early trading. 
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